DAVE BRIGGS, CNN ANCHOR: After seven years, Republican efforts to repeal Obamacare have failed. The vote came just hours ago. We're live on Capitol Hill where John McCain's deciding vote left lawmakers and the country stunned.

Welcome back to EARLY START, everybody. I'm Dave Briggs.

CHRISTINE ROMANS, CNN ANCHOR: Wow. That was all so dramatic. What a long night.

BRIGGS: Sure.

ROMANS: I'm Christine Romans. It is 4:32 in the East.

Breaking early this morning on Capitol Hill just about three hours ago, Senate Republicans trying to repeal and replace Obamacare. That vote came up short when the maverick made his mark. Senator John McCain just days removed from his cancer diagnosis stunning the chamber, turning thumbs down on the repeal bill. It happened just feet away from Republican Leader Mitch McConnell, prompting an audible gasp in the chamber.

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SEN. JOHN MCCAIN (R), ARIZONA: No.

(END VIDEO CLIP)

BRIGGS: Seven years of repeal efforts have now essentially gone up in smoke, leaving a frustrated Mitch McConnell to explain on the Senate floor.

(BEGIN VIDEO CLIP) MCCONNELL: I and many of my colleagues did as we promised and voted to repeal this failed law. We told our constituents we would vote that way, and when the moment came, when the moment came, most of us did.

(END VIDEO CLIP)

BRIGGS: Two other Republican senators, Maine's Susan Collins and Alaska's Lisa Murkowski, joined McCain, crossing party lines to vote against the repeal bill.

So, how did this go down behind the scenes, and where do GOP leaders go from here?

Let's go live to CNN's Phil Mattingly, who's not slept a wink. He's live on Capitol Hill.

Phil, good morning to you. How did this all go down?

PHIL MATTINGLY, CNN CONGRESSIONAL CORRESPONDENT: Yes, Dave, clearly, the peak drama with Senator McCain on the floor voting no, but I'm told, dramatic scenes were happenings behind the scenes, four hours leading up to that. Senator Majority Leader Mitch McConnell trying to bring Senator McCain around. Vice President Mike Pence on the Hill to be a potential tie-breaking effort also giving his best effort, at one point, short, just off the Senate floor, handing the phone to McCain -- the phone, President Trump, also trying. That didn't work either.

In the end, guys, they simply weren't able to deliver on the promise they've made year after year after year, and the disappointment on one side and the glee on the other was very clear. Take a listen to the Senate leaders from both sides.

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MCCONNELL: Now, I imagine many of our colleagues on the other side are celebrating -- probably pretty happy about all this. Our friends on the other side decided early on that they didn't want to engage with us in a serious way, in a serious way, to help those suffering under Obamacare.

SEN. CHUCK SCHUMER (D-NY), MINORITY LEADER: It's time to turn the page. I would say to my dear friend, the majority leader, we are not celebrating. We are relieved that millions and millions of people who would have been so drastically hurt by the three proposals put forward will at least retain their health care.

(END VIDEO CLIP)

MATTINGLY: And, guys, while the president's lobbying efforts with Senator John McCain didn't work, he did take to Twitter shortly after the vote, tweeting out: 3 Republicans and 48 Democrats let the American people down.

[04:35:08] As I said from the beginning, let Obamacare implode, then deal. Watch. What's most fascinating about all of this is this is something that took place over the course of hours -- frankly, it seems like about six days ago at this point in time.

But late in the evening, Republicans releasing their bill. They had pared back and pared back and pared back the repeal and replace efforts to eventually a skinny bill that would essentially just to do a bare-bones repeal of key Obamacare components. The basic goal, just send it to the House. Get it to conference committee and try and negotiate going forward.

But that was a major, major concern of Republican senators, recognizing that this bill wasn't something any of them wanted to become law, and trying to get commitments from Speaker Paul Ryan that the conference would actually happen. The House wouldn't pass the bill.

Now, the speaker at one point late released a statement saying the House was willing to go to conference. That wasn't enough. The speaker then picking up the phone, calling several senators including Senator John McCain, saying, look, we will go to conference, you have my word, we will go to conference.

In the end, Senator McCain in his statement after the vote saying even that wasn't enough.

So, guys, you had the entire apparatus of the Republican Party, all of their senior officials, working on this. In the end, whether it was Susan Collins from Maine, Lisa Murkowski of Alaska, and Senator John McCain of Arizona, it wasn't enough. And in terms of what happens next, you talk to Republican aides up here, they make very clear, while obviously they're exhausted, they're very surprised, most of them thought they were going to get there in the end, they are clear on one thing -- there is no path forward that they know of right now.

Obviously, this has been resuscitated multiple times the last five or six months, so anything can happen. But at least at this moment, that seven-year campaign promise, the reason Republicans have majorities in the Senate, the House, and partially the reason they own the White House right now, they won't be able to deliver on it, guys.

ROMANS: You know, John McCain essentially said this is a shell, this bill is a shell. And I don't have confidence that we're going to be able to fill it with meaningful legislation and get something done. Is that -- is that the bottom line?

MATTINGLY: Yes, look, it really is. I think you can talk to -- I've been talking to both Senate and House Republican aides over the course of the last 48 to 72 hours. The real issue here is if Senate Republicans couldn't get the votes for repeal and replace plan now, why all of a sudden are they going to get 50 votes for whatever the conference could come up with?

And with that in mind, the idea as a last resort, the House would eventually pass this bill that had no replace elements whatsoever, just repealed the individual mandate, the employer mandate, the medical device tax, tried to defund Planned Parenthood for a year. That on its own in isolation would have caused major disruptions in the insurance markets. And I think the concern that Senate Republicans simply were never going to be able to coalesce around a single repeal and replace proposal made this vote, at least for Senator McCain, certainly Senator Murkowski, too much of a risk.

Senator Collins was never going to come along. But that risk wasn't something they were never going to deal with.

BRIGGS: OK, let's talk about Lisa Murkowski. Presidents can take different tactics, they can try to use a close relationship. They can try to intimidate. They can try to just use the respect, the admiration, the fear, whatever it is they have in their arsenal. What did the president attempt to use to bring Lisa Murkowski on board? How did it go?

MATTINGLY: Yes, both publicly and privately, it seemed to be using the bully pulpit in an intimidating factor. Obviously, you saw the president tweet about Lisa Murkowski earlier in the week. We also found out through Senator Murkowski's colleagues, Senator Murkowski later confirming that Ryan Zinke, the interior secretary, called both Dan Sullivan, Lisa Murkowski's colleague from Alaska, and Lisa Murkowski, and informed them that Lisa Murkowski's no vote against the motion to start debate earlier in the week was going to hurt the administration's position.

Guys, that's not something that works on Lisa Murkowski. She's been very clear about what she wants on policy, very clear about the issues she had about repeal and replace, the things that Alaska very specifically needed here. And this idea that somebody who, keep in mind, in 2010 lost the Republican primary, won as a write-in candidate, known to be a fighter, known to be her own senator -- and perhaps more importantly, is the senator who chairs the committee that oversees the Interior Department and Secretary Ryan Zinke, this strategy is clearly not weren't effective, but probably blowing back in the administration's face at some point.

Look, administrations do this. You try and pull every level of government you can to get the votes to where you need to be, and that's exactly what the Trump administration was trying to do here, just in this case, it didn't work.

ROMANS: How many coffees have you had? That's my big question.

MATTINGLY: I'm trying to put it directly into the veins at this point. If that's possible, I'm in. Just mainline it.

BRIGGS: Good luck to you, Phil. It will be a long day. We'll check back.

ROMANS: Come back soon. Let's bring in -- sorry, I interrupted you --

BRIGGS: No, no. Just the two women that voted no.

Let's bring in Kimberly Leonard, though, from the "Washington Examiner." Those two women that were left out of the process entirely, you wonder if that comes back to haunt them.

Let's talk about what is next, what is the path forward on health care in the United States?

[04:40:02] KIMBERLY LEONARD, SENIOR HEALTH POLICY REPORTER, WASHINGTON EXAMINER: Well, they certainly have to do something to help fix Obamacare. They're having a lot of issues right now with the health insurance exchanges. So, whether that means suspending some of the taxes in Obamacare or maybe adding additional federal funding into it, they're looking at a pretty long road ahead, limited long road because open enrollment is coming up.

But they have to be able to come to some agreement on both sides about how to patch up Obamacare.

ROMANS: In the meantime, it is the law of the land. The president says, hey, we're just going to watch it implode. Watch it implode, that's what he says.

But the White House has a great deal of leverage in how things go from here. For example, open enrollment is in October. Could they starve the enrollment process of funding for advertising, for, you know, those clinics that they usually have to tell people how you sign up and why you have to sign up and how you're going to get fined? Could they defund the process?

LEONARD: Well, that's one of the interesting parts of the way the Obama administration worked on Obamacare. Every open enrollment, they got extremely involved. You know, they put out a lot of ads, they hired navigators who would actually help people sign up for insurance. Obviously, they had issues with their Website early on. But they were very much invested in trying to get people signed up.

And some people have said, well, should they really be doing that? This is really just going to private insurance companies, should the private insurance companies be the ones who are recruiting customers? And so, it's possible we'll see some of that. How will the administration work to undermine the Affordable Care Act so that it doesn't function the way that this t should and so that -- the way that it should and so that they can get something in the end out of bargaining with the Democrats.

ROMANS: I mean, they could tell the IRS, well, you're not going to collect the fines. You know, I mean, there are things they could do to really undermine it, to force the implosion.

LEONARD: Right. And they can't exactly say don't take up the fine, but they can loosen the definition they put on the hardships around why people don't have health insurance. And in previous years the exemptions have been a little bit loose. It's something that insurance companies have complained about. And so, it could make it a lot worse.

BRIGGS: So, Democrats and Republicans alike, some have spoken about the hope, the desire for bipartisan work on health care. But largely, it's hung up on one word -- and that's repeal, because whatever Republicans want, they want repeal to be a part of it. And Democrats will not allow for that.

So, what is the common ground between the two parties on health care?

LEONARD: Well, they can continue to use different semantics. A couple of years ago, a spending bill that was passed in which changes to Obamacare were made. The Cadillac tax was suspended. And the health insurance tax was suspended, as well.

And at the time, Democrats said, look, we've made a fix to Obamacare, and Republicans said, we repealed Obamacare. It was the exact same policy move, just different language that was used around it.

And so, I think at the end of the day, what voters are mostly going to notice is am I paying more for health care than I was last year, and am I able to access a wide range of doctors? Do I have access to insurance at all? Those are all things that people are going to be looking at and things that we'll be covering as we kind of head into the next open enrollment and into next year. There are things they can do to make it better.

ROMANS: You know, I'm not in Obamacare. I have my health insurance through my company. And my costs have gone up. My out-of-pocket has gone up. What they cover has gone down.

I mean, it's been unbelievable the trajectory of health insurance over the past 20 years, I would say, since I started working. That is independent of Obamacare.

I don't hear anybody talking about health care costs under control, prescription drug costs -- the Democrats mentioned it recently. I mean, the things that really bother people about health care. If you want to say every four years when you go to the ballot box you say, are things better in health care? They've been worse. They've been worse since, you know --

LEONARD: Well, right, when it comes to costs, you kind of run into difficult political ground because what you're essentially saying by lowering costs is that you're also going to be reducing access to something. So that's something that politicians will point to that happens in other countries. Look, if you limit certain prices on drugs, then you can't have access to every drug that we have access to in America. And by access to meaning it's available, not necessarily that people can pay for it.

ROMANS: Right.

LEONARD: But -- so that's one of the arguments that you run into. When you say let's lower costs, you're really asking physicians also to perhaps do more with less. You're asking hospitals to provide better equality measures. Obamacare had some of that but wasn't the push that would be necessary. It would be difficult politically get some of that through.

BRIGGS: Oh, the politics of this, too. Kimberly Leonard from the "Washington Examiner" -- thanks so much. We'll check in with you at 5:00. Christine, that's the question as we get throughout the day -- what are the politics of this? What does it mean for the House in 2018? What does it mean for the Trump agenda moving forward?

ROMANS: Gosh.

BRIGGS: So many questions.

[04:45:00 ROMANS: And if you have Obamacare insurance now, what does it mean for you in October when open enrollment begins? I mean, I just think if I were on -- an Obamacare customer, I'd be really concerned right now.

BRIGGS: One word, uncertainty, facing our health care system in the United States.

Ahead, the attorney general speaking out. What does he have to say about the president's week of cyber taunts directly at his A.G.?

STEVEN MNUCHIN, U.S. TREASURY SECRETAREY: I did not make one mortgage during or prior to the mortgage crisis.

[04:50:06] So I take great offense to anybody who calls me the foreclosure king.

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ROMANS: Democrats, of course, bestowed that title on Mnuchin during his nomination, accusing him of profiting from the financial crisis while he ran the lender, One West.

And the hearing got heated when Representative Keith Ellison brought up robosigning, the infamous foreclosure practice.

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MNUCHIN: I don't even think you know what the definition of robosigning is.

REP. KEITH ELLISON (D), MINNESOTA: You don't know what I know.

MNUCHIN: There's not a legal definition of robosigning.

(END VIDEO CLIP)

ROMANS: It was one of several testy moments with the House Financial Services Committee, demonstrating increasing frustration between Democrats and the administration. Mnuchin says this when asked if he would apologize --

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MNUCHIN: And I'm not apologizing to anybody because robosigning is not a legal term, and I was being harassed.

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ROMANS: He was later criticized for not providing records of financial ties between Russia and the president. But what is usually a low-key kind of appearance turned out to be a little feisty.

BRIGGS: No question about that.

All right. Check out the cover of the "New York Post," "Survivor White House." That is the Trump-friendly "New York Post." Why? There's dysfunction at the White House perhaps on steroids.

While Communications Director Anthony Scaramucci was blasting leaks coming out of the White House, turns out Scaramucci himself may have been leaking. In a profanity-laced tirade to "The New Yorker's" Ryan Lizza, he said he believes Chief of Staff Reince Priebus was behind the leak of his financial disclosure form, which may not have actually been leaked because it's public record. Scaramucci saying, quote, Reince is an expletive, paranoid schizophrenic. Wow.

ROMANS: Lizza who initially protected his source, when Scaramucci said he wanted Priebus investigated, says the communications director did not ask for the conversation to be off the record or on background. The White House in damage control mode here, defending Scaramucci who tweeted he sometimes uses colorful language but will refrain from doing it while at the White House.

In a tweet he said this -- I made a mistake in trusting in a reporter, it won't happen again. More now from CNN's Jeff Zeleny at the White House.

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JEFF ZELENY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Christine and Dave, as the White House ends another tumultuous week here, an internal fight inside the West Wing is brewing unlike anything we've seen in the first six months of this administration. By now, everyone knows about the fight between White House Chief of Staff Reince Priebus and the new Communications Director Anthony Scaramucci. Now, a lot of this played out yesterday on CNN's "NEW DAY" when Anthony Scaramucci called in and questioned Reince Priebus, really his credibility and asked if he was leaking, said if he was not, he should speak for himself.

Well, Reince Priebus did not comment throughout the day on Thursday. But asked at the daily press briefing, the new press secretary, Sarah Huckabee Sanders, was asked if the president had confidence in his chief of staff. This is what she said.

REPORTER: Sarah, does the president have confidence in his chief of staff?

SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: Look, I think I've addressed this question when it comes to staffing and personnel many times. That if the president doesn't, then he'll make that decision. We all serve at the pleasure of the president. And if he gets to a place where that isn't the case, he'll let you know.

ZELENY: So, not a definitive answer there. And now, in the new comments from the "New Yorker" magazine came out with Anthony Scaramucci using very colorful and vulgar language to describe Reince Priebus, chief strategist Steve Bannon and others, the White House again defending their new communications director.

I caught with Sarah Huckabee Sanders Thursday night at the White House, and she said, look, Anthony Scaramucci uses colorful language, he's passionate about things. She said, he won't do it again.

But we will see. This is a moment where despite everything going on with health care, with the Afghanistan agenda, other things happening at the White House, the palace intrigue still dominating and overshadowing the agenda -- Dave and Christine.

(END VIDEOTAPE)

BRIGGS: Jeff Zeleny, thanks.

Jeff Sessions speaking publicly for the first time since President Trump began targeting him with a barrage of critical tweets. The attorney general standing by his decision to recuse himself from the Russia investigation. He admits the relentless battering from his boss stings.

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JEFF SESSIONS, ATTORNEY GENERAL: Well, it's kind of hurtful, but the president of the United States is a strong leader. He is -- he's had a lot of criticisms, and he's steadfastly determined to get his job done. And he wants all of us to do our jobs, and that's what I intend to do.

TUCKER CARLSON, FOX NEWS HOST: He has said again and again in many different forms throughout this barrage that you should have acted differently, you should have recused yourself.

SESSIONS: I talked to experts and Department of Justice people who are trained in that, I'm confident that I made the right decision.

(END VIDEO CLIP)

ROMANS: Sessions says he believes the Justice Department is making tremendous progress but he acknowledges he serves at the pleasure of the president and will step down if his boss tells him to.

[04:55:01] Republican Chuck Grassley, the chairman of the Senate Judiciary Committee, is warning the president, though, he will not hold hearings for a successor to Sessions in 2014 -- 2017. The calendar is set, don't mess with Jeff.

And Senator Lindsey Graham cautioning the president there would be holy hell to pay if he fires the attorney general.

BRIGGS: Wow. A bill slapping new sanctions on Russia headed to the president's

desk. The Senate Thursday passing the bill by a 98-2 margin. It passed the House earlier this week, 419-3. The legislation allows Congress to block President Trump from easing sanctions against Moscow. It also includes new penalties against Iran and North Korea.

The bill is one of the first major bipartisan pieces of legislation passed during the Trump administration. The White House not saying if the president will sign the bill, only that he would review it. He has ten days to decide once it hits his desk.

ROMANS: The U.S. is ordering relatives of American diplomats to leave immediately Caracas, two days ahead of a polarizing election that is threatening to tear the Venezuela apart. The vote called by President Nicolas Maduro is an attempt to elect a new assembly and rewrite the country's constitution. Maduro's opponents call it a shameless power grab and end of democracy.

BRIGGS: One hundred and eleven people have died in violent protests in Venezuela since April. And now the Venezuelan government says it will ban protests ahead of this weekend's election. That move not expected to keep the streets quiet.

CNN's Paula Newton with more from Caracas.

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PAULA NEWTON, CNN CORRESPONDENT: Good morning, Christine and Dave.

We are bracing for a day of protests in Venezuela as the opposition comes against the government of President Nicholas Maduro who is holding a vote on Sunday, a vote the opposition says will give this government the powers to act like a dictatorship. Now, when we say a day of protests, there will likely be very intense confrontations, because the government says these protests are now illegal.

You know, we caught up with what people here call a resistencia, the resistance. These are everyday people using everything but the kitchen sink to fight fire with fire. DIY shields, improvised explosives, these people say unless they get on the street and fight, they believe that Nicolas Maduro will be able to do what he wants in this country.

Remember, this country dealing with a humanitarian crisis, severe shortages of basic food and medicine.

A game changer here could be the Trump administration. They're saying if Maduro goes through with this vote, that there could be strong and swift economic reaction from the White House -- Christine, Dave.

(END VIDEOTAPE)

ROMANS: All right, Paula. Thank you so much for that.

Let's check a check on CNN "Money Stream" this morning.

Global stock markets lower after what was a mixed day on Wall Street. The Dow hit a fresh record high. But the Dow is 30 stocks.

A slump in tech dragged down the Nasdaq and S&P 500. Tech, of course, has been a huge driver of the stock market of 23 percent. These five tech companies have had an outsized effect on the market. They account for more than one-fourth of the gains in the S&P 500 this year, and four of five closed lower.

Some on Wall Street worry stocks may have gotten too hot. But for now, investors are shrugging off high valuation, instead focusing on big corporate profits. And overall tech earnings have been strong.

One tech stock that did not tumble, Facebook. The stock jumped nearly 3 percent after strong earnings, pushing its value to about $500 billion. The $500 billion milestone, it's a big day, especially considering it's only been public for five years.

Right now, only three other tech companies are worth more -- Apple, Google parent Alphabet, and Microsoft. Amazon also hit that $500 billion mark on Wednesday.

Speaking of Amazon, the stock falling more than 3 percent overnight after profits declined 77 percent. You know, Amazon has made multiple investments and acquisitions, including that purchase of Whole Foods for $13.7 billion. While sales grew last quarter, net profit dropped to $197 million from $875 million the year before.

And that stock drop also ended Jeff Bezos' very brief run as the world's richest person. He briefly dethroned Bill Gates Thursday morning.

Dave Briggs and Christine Romans have a long way to go to even be considered.

BRIGGS: We're close. We're bridging the gap.

ROMANS: I am not ever going to be close. I'm not. Those guys are like brainiac risk-takers, you know?

BRIGGS: No one feels bad for Jeff Bezos losing that title momentarily.

ROMANS: No.

BRIGGS: All right. Major developments on health care as EARLY START continues right now.

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ANNOUNCER: This is CNN breaking news.

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MCCONNELL: This is, you know, clearly a disappointing moment.

(END VIDEO CLIP) BRIGGS: In one of the most dramatic moments you'll see, Republican efforts to repeal Obamacare have died. An early morning vote in the Senate came down to one single vote -- John McCain -- with the moment Democrats and Republicans will not soon forget. We have you covered across Washington this morning.

Good morning, everyone, and welcome to EARLY START, on the huge day in this country. I'm Dave Briggs.